Welfare - Disability Support Pension

Disability Support Pension

Peter Yeend

The Budget announced revised access procedures for some
Disability Support Pension (DSP) claimants, to commence from 1
January 2012.[1] The
changes to DSP entry for new claimants were described as
follows:

Disability Support Pension claimants without
sufficient evidence of a future work capacity of less than 15 hours
per week may be referred to an alternative income support payment
and offered employment assistance through Job Services Australia or
Disability Employment Services. These services will assist in
developing the skills of job seekers or building evidence of their
future work capacity for subsequent claims which may be made at any
time.[2]

DSP claimants, who are not considered to be self-evidently
unable to work for at least 15 hours a week, will be asked to
actually demonstrate they cannot work to this level by
participating in employment assistance or rehabilitation.

Origins of the initiative

This initiative has its origins in the inexorable growth in the
DSP population over the past 20 years and the limited impact on
this growth of the Welfare to Work (WtW) reforms of the Howard
Government, introduced in 2006.[3] The major change to the DSP qualification
requirements with WtW was a reduction in the number of hours that a
person was unable to work due to their disability, down from being
unable to work for 30 hours a week to being unable to work for at
least 15 hours a week.

Growth in the DSP population

In 1985, the DSP population was 259 162.[4] There has been a 43.5 per cent increase
in the DSP population from 1997 to 2009.[5] Changes since 2001 are documented
below.

No other income support program has seen this level of sustained
increase. Several factors have contributed to this growth,
including: the ageing of the population and corresponding ageing of
the workforce aged population, increased levels of unemployment for
the older working age persons, and the incentives associated with
being on DSP compared with the other main income support payment
for the working aged, the Newstart Allowance (NSA). The economic
downturn is also likely to have been a contributing factor to some
of this increase since 2008.

The comparative advantage of Disability Support Pension over
Newstart Allowance

The main advantage of DSP over NSA is that DSP is paid at a much
higher rate.[6] DSP
is also tax free and has more generous pensions’ income and
asset testing. DSP also provides access to the Pension
Supplement[7] and the
more generous concessions attached to the Pensioner Concession
Card. Another major advantage for claimants is that DSP has no work
search or mutual obligation requirements, as does the NSA.

Welfare to Work reforms

The main element of reform for the DSP program in the WtW
reforms was the reduction in the work capacity test from 30 hours a
week to 15 hours a week. This reform commenced from 1 July 2006 and
made the work capacity test much tougher. However, as can be seen
in the table above, its impact on DSP growth was only short-term
and the DSP growth rates of pre-WtW have returned. Why did this
occur? In brief, the work capacity test is essentially a subjective
test and the decision is made by the delegate under the Social
Security Act 1991 (SSA). Regardless of where the bar is set,
claimants adjust their behaviour. Accordingly DSP claimants are
likely now to present their claims as being unable to work for 15
hours a week with presumably their supporting medical evidence.

Granting DSP and assessing work capacity

There are two main streams through which a DSP claim is
initially processed. Firstly, the claim is considered to see if it
is ‘manifest’. Manifest means that the person is
clearly and obviously medically qualified for DSP, based on the
presentation of medical evidence. For example, if a claimant has a
terminal illness, permanent blindness, requires nursing home level
care, or has category 4 HIV/AIDS, this would be manifest. For a
manifest claim, subject to other qualification requirements being
met, the DSP claim can be granted. [8]

Where the claim is not manifest, then the impairment points
level must be assessed against the DSP minimum 20 points
requirement. Where 20 points impairment is not achieved, the claim
can be rejected. Where 20 points are achieved, the next step is the
continuing inability to work (CITW) assessment.[9] The CITW assessment is a matter
for decision by the Centrelink officer who is the delegate under
the SSA. The CITW assessment considers opinions and advice from the
treating doctor, the Medibank Health Solutions doctor, and the Job
Capacity Assessment (JCA) team,[10] but the delegate makes the decision. This CITW
decision is the matter that generates most appeals against DSP
claim rejections. Notwithstanding the significant aforementioned
change in the CITW test with the WtW reforms, the figures above
would suggest that many DSP claimants are succeeding in being
assessed as unable to work for at least 15 hours a week, hence
motivating the changes in this Budget.

2010–11 Budget initiative – DSP claimants will have
to prove they have a CITW

The Budget initiative provides for non-manifest cases, (that is,
where it is not clear that the person cannot work for more than 15
hours a week), to be referred to another income support payment,
the NSA. This may not apply to all non-manifest cases. Considering
that more than 50 per cent of current DSP claimants come from NSA,
some may already have supporting evidence that they are unable to
work for at least 15 hours a week from previous work search and
work assistance attempts.[11]

The Government has provided no indication as to how many or what
proportion of DSP claimants will be affected by this Budget
measure. This is not surprising as this process has not been
attempted before. Given that manifest grants of DSP are by far the
minority of grants, there is the potential to place many DSP
claimants on NSA for varying periods to actually test their CITW
after they have received assistance and support. However, this
process may not realise all that is hoped for it. So long as there
continues a comparative and significant advantage of DSP over NSA
there will be an incentive for claimants not to jeopardise any
future DSP claim attempts by demonstrating improvements in their
work capacity.

Assessing continued inability to work is problematic

Assessing CITW has been an element of DSP claims since
DSP’s introduction in 1991 and, for that matter, also its
predecessor, the Invalid Pension, which was introduced in 1908.
However, CITW assessments are highly problematic for a number of
reasons. For example, the same medical condition may affect
individuals differently, depending on their age, their work history
and skills, and their own attitude to the condition. While it is to
be expected that DSP claimants would regard themselves as
significantly affected by their condition, their actual work
capacity may be quite different. It may be that they have an overly
pessimistic view of the real impact and level of imposed
restriction of their condition. In their turn, treating doctors,
while expert in the diagnosis and treatment of a medical condition,
may have no training or skills in work capacity assessments. Their
role may involve them in serving conflicting interests. On the one
hand patients may call on them to be an advocate and supporter of
their claim. On the other hand they are required to provide
unbiased objective advice about the impact of the condition and its
effect on the person. The ongoing increase in the DSP numbers
following the recent WtW changes would suggest that even where a
radical change is made to the qualification requirements, the
reality of the complexity and subjectivity of the assessment
process can render changes ineffective.

Summary

This initiative is estimated to realise savings of $383.4
million over four years.[12] Given that this is not a large sum in the context of a
program with estimated outlays of between $13 to $14 billion over
the next four years,[13] this initiative may not now be viewed as the major
reform to the DSP program that was envisaged when introduced with
the WtW changes of 2006.

Successive governments have supported the view that persons of
working age should, where they can, support themselves first,
before calling on the support of the taxpayer by way of income
support payments. However, a policy that places an emphasis on
claimants presenting as unable to work would seem to be
counterproductive when the emphasis should be on work capacity.
This policy does aim to enhance work capacity through support and
assistance, but its effectiveness may be limited as long as there
remain perverse incentives.

[9]. CITW means the person is unable to work
for at least 15 hours per week at wages at or above the relevant
minimum Australian wage, even if not within the person's locally
accessible labour market. The person must be able to do this work
independently of a program of support.

[10]. The JCA is an independent comprehensive exploration of
the person's participation barriers and CITW. It also identifies
any services that could improve their capacity to work. The
assessment can include input from a range of medical and allied
health professionals.